How to pick a cash account

Shares, property and funds all have their advantages, including higher returns over the longer term and tax benefits, but there are times when leaving your money in a lower-risk cash account is a more appropriate option.

The Australian Securities & Investments Commission (ASIC) says lower-risk, interest-bearing products are a good option for people looking to park their money for a short time — for example, if you've just sold your house and want to place your money somewhere until you need it for a new one.

They are also a good way to save money for a large expenditure you're expecting in a few years time, such as a house deposit, a trip overseas, a car or even school fees, says ASIC. Cash accounts can also help you reduce risk in your investment portfolio.

But leaving your extra cash or savings in an account paying little or no interest is almost as bad as stashing it under the mattress.

It's up to you to find a good deal for your savings. It's easy to use our find an account service that lets you compare accounts and find the best one for your needs.

Investment options you can choose from include online savings accounts, term deposits, cash management accounts, cash management trusts and debentures. Let's take a look at each of these in a little more detail.